Anglo loans may be bundled and sold to foreign investor -- Dukes
Published 30/09/2011 | 05:00
ANGLO Irish Bank's speeded-up closure could see the institution's last loans grouped together with other "loose ends" in the banking sector and sold off to a foreign investor, chairman Alan Dukes said yesterday.
The comments came as he revealed that Anglo has already sold "several hundred million" worth of UK loans and will ramp up efforts to sell the €9.5bn book after the imminent disposal of the bank's US operations.
Mr Dukes was speaking at a Dublin conference where it also emerged that the €600m profit Anglo recently booked from the under-valuation of loans bought by the National Asset Management Agency (Nama) will be largely reversed by the end of the year.
Anglo was originally due to be wound up within 10 years, but management have recently formed the view that the resolution could be much faster, potentially within as little as three or four years.
Mr Dukes yesterday expanded on how a faster closure could be achieved, suggesting that once the newly merged Anglo/Irish Nationwide had sold its foreign assets and the Nationwide mortgage book "it could be sensible" to put what was left into a new entity that would also include foreign banks.
This new entity could then make an "attractive" asset for a foreign investor who could create a full-service bank to end the "duopoly" of AIB and Bank of Ireland, Mr Dukes said, though he cautioned that overseas investors were unlikely to invest imminently.
Anglo is believed to be within days of announcing the sale of its $9.5bn US loan book, and aims to sell the Nationwide mortgage book by 2016.
The bank would "devote more energy" to selling the UK book once the US sales had been completed, Mr Dukes said. Once the UK loan book is sold, Anglo will be left with less than €10bn of loans.
Mr Dukes declined to predict exactly how long it will take to close the bank, but said said it would happen "more quickly" than the 10-year plan that was set in place by the Government.
While the faster resolution of Anglo is universally seen as a positive development, there was some bad Anglo news yesterday as Nama boss Brendan McDonagh revealed that the bank's €600m gain on Nama transfers for the first half of the year is likely to be reversed.
Anglo booked the gain because it had transferred loans over to Nama at a "bulk discount" and subsequent due dilligence showed the discount applied was too harsh.
When the gain was booked Nama had only gone through some of the "bulk discount" loans it got from Anglo. Mr McDonagh yesterday told reporters that a trawl through the remainder of Anglo's loans meant that the full-year impact for the bank would be "pretty neutral".
Asked if that meant the €600m gain would be reversed, he replied, "largely, I would expect so".
It is understood that the original €600m gain related to loans from Anglo itself, while the later due diligence is more heavily weighted towards loans from Irish Nationwide.
Speaking at the Dublin Restructuring Conference, Mr Dukes also revealed that Anglo will "fit in with" any government plans to restructure the €30bn in state IOUs used to bail out the bank.
"We're a policy-taker not a policy-maker in that regard," he said, adding that there had not been any detailed discussions yet. The Government wants to ease the current €17bn interest burden and spread payments out over a longer period.